IRS Raises Annual Gift Tax Exclusion for 2013

The Internal Revenue Service has announced that it has increased the annual gift tax exclusion (the amount that you can gift to any one person in any year free from gift tax) from $13,000 to $14,000, beginning January 1, 2013.  

This means that, beginning in 2013, you can give $14,000 in cash or other assets each year to as many people as you want.  Spouses will be able to combine their annual exclusions for a total of $28,000.

Gifts that exceed the annual exclusion count against the lifetime exclusion, which is currently $5.12 million ($10.24 million for married couples).

Absent federal legislative action, at the end of 2012, the current lifetime $5.12 million per-person exclusion from the federal estate and gift tax will decrease to $1 million and the tax on transfers above that amount will go up to 55% (currently 35%).